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Career concerns incentives: An experimental test

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  • Alexander K. Koch
  • Albrecht Morgenstern
  • Philippe Raab

    ()
    (School of Economics and Management, University of Aarhus, Denmark)

Abstract

Holmström’s (1982/99) career concerns model has become a workhorse for analyzing agency issues in many fields. The underlying signal jamming argument requires players to use information in a Bayesian way, which is difficult to directly test with field data: typically little is known about the information that individuals base their decisions on. Our laboratory experiment provides prima facie evidence: i) the signal jamming mechanism successfully creates incentives on the labor supply side; ii) decision errors take time to decrease; iii) while subjects’ average beliefs are remarkably consistent with play, a mild winner’s curse arises on the labor demand side.

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Bibliographic Info

Paper provided by School of Economics and Management, University of Aarhus in its series Economics Working Papers with number 2009-01.

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Length: 37
Date of creation: 09 Jan 2009
Date of revision:
Handle: RePEc:aah:aarhec:2009-01

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Web page: http://www.econ.au.dk/afn/

Related research

Keywords: Incentives; Reputation; Career concerns; Signal jamming; Experiments;

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References

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Citations

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Cited by:
  1. Charness, Gary & Kuhn, Peter, 2011. "Lab Labor: What Can Labor Economists Learn from the Lab?," Handbook of Labor Economics, Elsevier.
  2. Frederiksen, Anders, 2010. "Earnings Progression, Human Capital and Incentives: Theory and Evidence," IZA Discussion Papers 4863, Institute for the Study of Labor (IZA).
  3. Blanco, Mariana & Engelmann, Dirk & Koch, Alexander K. & Normann, Hans-Theo, 2014. "Preferences and beliefs in a sequential social dilemma: A within-subjects analysis," DICE Discussion Papers 145, Heinrich‐Heine‐Universität Düsseldorf, Düsseldorf Institute for Competition Economics (DICE).

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